HANSA 10-2023

SCHIFFSTECHNIK | SHIP TECHNOLOGY
Light at the end of the Korean tunnel
Hampered by the oil shock, financial difficulties and the Covid-19 pandemic in the last
decade, South Korea’s largest shipbuilders appear to have gotten back on their feet, although
not without a management or portfolio overhaul in many cases. By Patrick Lee
losses were discovered, necessitating another
state-sponsored bailout, amounting
to $ 6 billion. DSME also had to cut
1,000 jobs to slash expenses.
Attempts by the state to have HD
Hyundai acquire DSME were blocked by
the European Commission in January
2022, expressing concern with possible
reduced competition in the construction
of liquefied natural gas (LNG) carriers.
Finally, in September 2022, Hanwha
Corporation, another chaebol, agreed to
acquire a 49.3 % stake in DSME for
around $ 1.4 billion, with KDB retaining a
28.2 % stake. The transaction was completed
in May 2023, resulting in DSME
being renamed. Hanwha’s businesses
span the defence, construction, petrochemical
and finance sectors, and the
group said there will be synergies between
ship building and its own defence
and green energy businesses.
A Hanwha Ocean representative told
HANSA that the shipbuilder will continue
to build on its dominance in LNG
carriers, while developing new low- and
zero-emission solutions to support decarbonisation.
Furthermore, Hanwha
Ocean will leverage Hanwha’s strengths
and expertise in the defence, transportation,
materials, and energy sectors
to win more orders for military vessels,
offshore plants and oil tankers.
STX O&S = K Shipbuilding
Still one of the largest Korean shipbuilders: Samsung Heavy Industries
Hyundai Heavy Industries and Samsung
Heavy Industries, the
country’s two largest shipbuilders, have
remained under the same owners, but the
others have been renamed after white
knights acquired them.
Daewoo = Hanwha
The latest overhaul involves Hanwha
Ocean, formerly known as Daewoo Shipbuilding
& Marine Engineering (DSME).
South Korea’s third-largest shipbuilder’s
troubles can be traced back to the Asian
financial crisis in 1997, resulting in the
Daewoo chaebol’s collapse.
Subsequently, due to the shipbuilding
industry’s importance to the economy,
the South Korean government assumed
control of DSME, by acquiring a 51 %
stake through Korea Development Bank
(KDB) and Korea Asset Management
Corporation (KAMCO).
For more than 20 years, efforts to privatise
DSME failed due to the global financial
crisis in 2008. Then in 2015, accounting
irregularities involving hidden
© Patrick Lee
K Shipbuilding, formerly STX Offshore &
Shipbuilding (STX O&S), was South
Korea’s fourth largest shipbuilder in its
heyday, but has been reduced to a fraction
of its past scale after emerging from
debt restructuring.
The STX group’s woes can be traced to
the 2008 global financial crisis and the
subsequent downturn in shipping. Following
major financial problems in 2013,
which resulted in STX O&S‘ creditor
banks taking control of the ship builder,
STX’s stake was substantially diluted.
Consecutive losses caused STX O&S to
be delisted from the Korea Exchange in
2014, precipitating drastic cost-cutting
involving the shuttering of its shipyards
in Busan and Dalian in China.
In June 2016, STX O&S came under
court protection after three consecutive
loss-making years. As part of STX O&S‘
restructuring, its creditor banks sold the
ship builder‘s remaining shipyards in Europe
and Goseong, South Korea, leaving
it with just its yard in another South Korean
city, Jinhae.
On 27 July 2021, a consortium comprising
United Asset Management Company,
South Korea’s largest buyer of distressed
assets, and KH Investment, a
South Korean investment company, paid
$ 217.2 million to acquire a 95 % stake in
STX O&S. Henceforth, STX O&S was renamed
K Shipbuilding.
Its much whittled-down area of 1m
square metres means K Shipbuilding can
only specialise in small and mid-sized
ships, a far cry from the good days when
STX O&S counted drillships in its portfolio.
Its spokesperson told HANSA: »Our
present orderbook comprises 25 MR
product tankers and Aframax oil tankers.
44 HANSA – International Maritime Journal 10 | 2023